I am willing to invest a substantial amount of capital in a number of mutual funds with monthly dividends, which I have already identified, and which will pay my living expenses.

Now, my doubt is - is this the right time to invest? I am not worried about what a market correction might do to the value of my investment - as I am in for the very long run. However I am concerned that if I don't wait for a market correction, I would lose the opportunity to have more buying power, hence higher returns.

One issue is whether you will spend all the dividends/interest or whether some will be reinvested. If the latter, a potential market downturn would result in purchasing shares at a lower cost with the interest and dividends. If spending the interest/dividends completely, then you are talking about market timing. Research shows lump sum investing to be fine for those with long investment horizons.

The S&P500 went from 1975 to 2000 (25 year period) without a annual correction year (i.e. 10% or more drop for the year with dividends included) so if one were to extrapolate that into the current picture using 2008 as a starting point we could have a correction free period until 2033. I am not saying this is what is expected but just that if you wait for the correction, based on historical data, it's possible you could be waiting until 2033 or even 2040 losing out gains in the process.

I guess the point is that a lot of "experts" are saying the correction/crash is imminent because it's been 9 years, but when I check historical data these correction free periods are numerous and much longer than 9 years.

Unless you are waiting for a temporary drop intra-year which I think is really difficult to time, what if it goes up 15% and then falls 10%, if you buy when it falls 10% then you have still missed 5% upside.

If spending the interest/dividends completely, then you are talking about market timing. Research shows lump sum investing to be fine for those with long investment horizons.

Yes, for me it would be the above scenario. I would be spending most of the dividends, perhaps re-investing just a tiny percentage to offset inflation a bit. What you say about "lump sum investing" is exactly what I was thinking/hoping would apply to my case.

Something I am unclear on is: how would market corrections, or even crashes, impact on a fund's dividends?

If spending the interest/dividends completely, then you are talking about market timing. Research shows lump sum investing to be fine for those with long investment horizons.

Yes, for me it would be the above scenario. I would be spending most of the dividends, perhaps re-investing just a tiny percentage to offset inflation a bit. What you say about "lump sum investing" is exactly what I was thinking/hoping would apply to my case.

Something I am unclear on is: how would market corrections, or even crashes, impact on a fund's dividends?

Generally, companies that are stodgy, utilities for example, can be counted on to pay dividends consistently, as can many mature, blue-chip companies. The risk in chasing dividends is that companies experiencing difficulty may raise dividends in search of investors only to reduce or eliminate them if the downturn continues. General Motors is a recent example of the latter. There are other complexities, but this is a general comment on which others have elaborated in previous threads.

Don't worry, the day you choose to invest in the market it will go down the next day.; it happens to everyone. The day you sell and take some profits, the next day.the markets will go sky high.

+1

Yes, this is so true. If you feel nervous and you have every right to feel that way, you can go in slower, but studies have shown that in most cases, it is better to lump sum into the market, but I know that is easier said than done.

Warren Buffett said if you are afraid of the market going down, you should not invest in stocks.

John Bogle said not only has he never met someone who could time the market, he has never met someone who met someone who could time the market.

Joking aside, dollar cost average your amount in over the next 12 months or so if it makes you feel more comfortable/appeals to you. It's a guarantee you'll have green days and you'll have red days but there's no time like the present.

Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.

It's too bad you couldn't have bought at the market in 2008-9. At this time, the market is aware of the risk of correction and has priced the market at its current level. Based on all known information, you will be paying a fair price to invest in the market if you put the whole lump sum in today.

If the risk of a crash bothers you, you should decide on a long term allocation that will work for you, but nobody knows if today will be a better day than tomorrow or a month from now or a year from now.

Diversify globally, and you should be fine. I don't know when the next correction and/or bear market will happen; however, US stocks are richly valued and have been for years. That is why I recommend you diversify globally. For what it's worth, I'm 50/50 US/International; however, some investors prefer to moderately overweight US stocks due to currency fluctuations, political crises, etc. that sometimes impact foreign markets. I have a long time horizon, so I don't worry too much about these risks. If you prefer to invest mostly or solely in US stocks, that's fine too; just make sure your time horizon is at least 10 years, preferably longer.